#USA #São Paulo #Chapter 11 #GOL Airlines #Abra Group

GOL Airlines Moves Forward with Chapter 11 Plan

GOL Linhas Aéreas Inteligentes S.A., a prominent Brazilian airline, has set a pivotal stage in its road to financial stability with its recent announcement regarding a proposed Chapter 11 plan of reorganization. This strategic decision was disclosed on December 9, 2024, amid ongoing efforts to restructure the company’s financial obligations and enhance its operational framework.

The filing is a collaborative effort between GOL and Abra Group Limited, its largest secured creditor and a significant stakeholder in other leading airlines in the region, such as Avianca. The alignment with Abra is particularly noteworthy, as it aims to pave the way for a successful restructuring process following a previously established Plan Support Agreement. This agreement was crucial, providing GOL the necessary framework to negotiate with its unsecured creditors and prepare for its upcoming court hearings. The proposed plan marks a significant milestone in GOL’s attempt to alleviate its debt burden, shifting towards a more sustainable operational model.

Key Highlights of GOL's Proposed Plan

GOL's Chapter 11 plan outlines an ambitious strategy to reduce its debt significantly. Among its highlights:

• - Debt Conversion: Up to $1.7 billion in prepetition funded debt will either be converted into equity or otherwise eliminated, alongside up to $850 million of other financial obligations. This major maneuver is expected to greatly decrease GOL’s financial liabilities, thereby granting it more latitude to innovate and grow.
• - Financial Reporting Context: As of September 30, 2024, GOL had reported staggering figures, indicating a total net debt amounting to R$27.6 billion and a net loss of R$830 million. The conversion of debt to equity, however, will lead to substantial dilution for current shareholders, adhering strictly to Brazilian laws regarding preemptive rights.
• - Equity Injection: Abra Group has agreed to settle its $2.8 billion debt claims via a combination of new equity and traditional debt forms, emphasizing the conversion of approximately $950 million into new equity—an effort designed not only to meet debt obligations but also to ensure more robust capital raising activities post-emergence.
• - Future Investment Plans: GOL intends to inject up to $1.85 billion in new capital to increase liquidity following its reorganization, which includes approximately $330 million from external equity financing. This capital will be vital for implementing its growth strategies and enhancing service delivery across its operations.
• - Aircraft Lease Agreements: In collaboration with its lessors, GOL has negotiated the restructuring of its aircraft leases, facilitating a smoother transition through the bankruptcy process and aligning operational capabilities.